Uncertainty affects rice farmers' plans for 2013

Greater competition from Australia and Egypt in the global market has dampened export prospects for California rice, and farmers say they worry they will have a harder time covering their production costs as they face lower returns and uncertainty in future farm programs.

"This year is kind of scary with all the high costs we have, like fuel, fertilizer, chemicals, labor and equipment," said David Lundberg, a rice farmer in Butte County. "It seems like every year they keep going up. The budgets are pretty tight now. You have to make sure you really watch it and get a good yield."

Lundberg noted the market price for rice has come down, even though California acreage and production both dropped last year.

Nathan Childs, an agricultural economist with the U.S. Department of Agriculture, attributes the price decline for medium- and short-grain rice to a weakened export market due to stronger competition from Australia and Egypt.

California exports about half its rice crop, with the largest market in Northeast Asia, which includes Japan, South Korea and Taiwan. While those exports have remained stable, Childs said, California's other key markets in the Mediterranean and Oceania face substantial competition from Australia and Egypt.

In recent years, California rice farmers -- who produce about 70 percent of U.S. medium- and short-grain rice -- had benefited from poor production in those competing countries, he noted. Australia's crop was sharply reduced by years of drought, while Egypt had not exported much rice due to water shortages and rice export restrictions imposed by the Egyptian government.

"Those factors have reversed," Childs said. "Both countries are shipping more-normal levels of exports, and the U.S. has lost some market share, especially in the Mediterranean."

Australia's 2012-13 crop, which will be harvested in April and May, is expected to be the largest since its 2001 harvest and Egypt had a record 2012-13 crop, Childs noted.

Lundberg, who is not associated with Lundberg Family Farms, said he hopes prices will be higher but thinks it will depend on how much rice is planted. Farmers in Arkansas, Mississippi and Louisiana have switched to growing medium-grain rice in years when prices have not done as well for long grain, the dominant variety grown in the South. But with prices of competing commodities such as corn being high, Lundberg said farmers may grow more of those crops and less rice, boosting prices.

California's 2012 rice acreage was 556,000, about 24,000 fewer than 2011, noted Chris Greer, a University of California Cooperative Extension farm advisor for Yuba, Sutter, Colusa, Sacramento, Placer and Nevada counties. He said he expects 2013 acreage will be about 525,000 to 550,000, "which would be about average for us if you look over the past 10 years."

"The indicators are that the market has stabilized and is possibly on the up-trend," Colusa County rice farmer Chris Torres said. "We're hoping it's going to get better, but we just don't know."